As most of us know, finance is an important function to any organisation as the company has to know how viable its balance sheet and profit and loss (P&L) statement is. The head of this function generally titled as Finance Manager is amongst the key supply chain stakeholders in my opinion.
Generally finance managers are responsible for business activities like budgeting and sales forecasting, accounting, reporting, bookkeeping, audits, payables and receivables, pay employees wages and salaries, prepare and plan internal financial information and prepare for never ending audits!
However, nowadays they are require doing more to involve in innovation initiatives, helping create vision and strategy and get involved in employee engagement initiatives. In my opinion it is important that supply chain folk have a good understanding of finance. And how this function can contribute to the success of the jobs we are in. This will ensure that the business can effectively manage the money we are saving as supply chain and procurement individuals, else we are spending in various commodities.
So if you need slightly better chance of succeeding at your business goals and mission here are 5 good reasons why your finance manager is amongst your key supply chain stakeholders:
1. Finance can help you to show impact on bottom line
As supply chain professionals we are always involve in cost reduction, inventory management, sales forecasting, supply management and many other activities which impact companies’ bottom line. If you are good friends with finance they can help you present the numbers in user friendly way, that highlight the saving you are making and making a solid impact to bottom line. The can also help you show solid audit trail of these savings.
If you are driving any E&O and Inventory reduction initiatives they can help you create provisions for dead inventory, identify cost elements which impact most or even stock accuracy! These are just one of the very few examples why finance colleagues are one of your key supply chain stakeholders and how they can help you showing impact to bottom line.
2. They can help you in your budgeting and profit planning
All supply chain and procurement managers have to submit or give their input annual budgeting and profit planning. In the early days of my Supply Chain Manager role, I found this task daunting, to the extent that I often questioned my manager with why exactly was I having to do this? You can guess the answer!
Your finance manager can help you with the process and provide your right guidance on how you can work through the input data, how you can sanity check your output and give you comparatives to validate your data.
For example entries like direct labor in warehouse, employee salaries, office suppliers, training and travelling budgets, Inventory budget, capital expenditure are typical items you have to deal with when you’ve been ask to put your annual budget! If you know them all great, if you don’t then you might want to tell your finance colleagues they are one of very important supply chain stakeholders!
3. They can help you fit in with business culture
When you are new in a company or someone new in the job it is important to understand the culture of the business. Considering supply chain and procurement are mostly viewed as cost center, adding little value apart from year-on-year saving. As these diminish, supply chain folks are forced to critically understand the wider business. Your finance leader can help you understand wider business and culture to learn what else is important.
4. You can make them look good!
Yes, we can also make finance guys look good. Not just our friends, in sales, customer service or marketing. For example, one of the task finance managers has to provide most accurse sales forecast for next year. So if you are running a well-oiled Sales & Operations Planning process you can provide sales forecast date for next 12-18 months which can be the most reliable input to profit planning.
Furthermore, in most businesses finance folks are responsible to providing forecast of inventory, cash flow, profit and loss all these financial aspects where we as supply chain professionals as massive impact (link to point 1 above). If we can provide reliable data which help them forecast these financial schedule with increased reliability and in turn we can make them looks good. What is in it for us as supply chain team? As they say in English…
“You scratch my back and I’ll scratch yours”
5. Finance can help you priorities strategically.
In my experience most supply chain jobs are very operational and tactical in nature. Someone is wrong somewhere every day. The only day when something is not wrong, it is either or Christmas Eve, Christmas Day or New Year’s Day! This makes our job very ‘reactive’ and ‘tactical’.
It is not all about avoid price increase, increased performance, service levels, and implications of risk. We ought to be responsible for giving input to strategic direction to business. So in all the day to day chaos around us, a day with finance guys off site just to discuss strategic topic can do wonder!
There are many other reasons why finance managers and their teams are amongst your supply chain stakeholders which could be very specific to your business. I have only tried to mention a view based on my experience.
We as supply chain and procurement professionals should be seen as promoting integration with other functions and ingrain themselves into stakeholder communities, acting as advisers and internal consultants, and generate outside the box ideas.